How to Create a Budget

The first step to understanding your money is to know how much you have. How much you have to spend on your needs such as bills, groceries etc. How much you have to spend on yourself and others and how much you have to save or pay off debt. 

Having a budget is the first most important thing to building your relationship with your money. It helps you understand a lot about what it is you are bringing in and where it is going. Also what you might need to change to benefit your lifestyle or the lifestyle you are aiming for in the future. 

When creating a budget you want to be quite strict with yourself, you may have to cut some things out. I would warn against being too strict though. If you tighten the purse strings too much you may become overwhelmed and not stick to it at all and completely give up. You need to make a budget that is sustainable. Remember that you can review your budget, it is never set in stone. Our situations can change at any time so our budgets must change with it. 

Start by writing down all your needs, this will be your utilities, bills, groceries and travel expenses. These are the things that you cannot live without and that you must pay out each month. Don't include any luxuries here, simply just the things that sustain your day to day life. 

Then you have the little extras that you pay for every month. Maybe you have a gym membership or a Netflix Subscription. These aren't things that you absolutely need but things that are important for your lifestyle. However, if these are adding up I would look into cutting back on some of these expenses. Remember if you want to save more money or pay off your debt quicker then you have to make some sacrifices. 

Then allow yourself some spending money. It is impossible to not give yourself anything to spend in the month, my budget for spending is £200 however now I have become a lot less "spendy" I am coming in below this often. This means I have £50 a week to spend on a meal out, some new shoes, a new bag if mine breaks etc.

Once you have these out of the way see how much you have left over and that is either what will go towards paying your debt off or what you can save. Now this will be different for everyone. If you are lucky enough not to have any debt then you can put this all into savings. If you have debt though - and again this also depends on how much you have in relation to how much you are earning - you will have to decide which debts you are paying off and if you want to also put some into savings as well. Here is a post where I explain the best way to pay off your debt, and what worked best for me: The Best Way to Pay Off Debt. 

Like I said before a budget is never set in stone, you will want to change it in the future if your income increases or your situation changes causing you to have more or even fewer outgoings. What you have to remember though is don't just change it because you want to spend more, you have to make these decisions to benefit your future. 

The first step to understanding your money is to know how much you have. How much you have to spend on your needs such as bills, groceries etc. How much you have to spend on yourself and others and how much you have to save or pay off debt.  Having a budget is the first most important thing to building your relationship with your money. It helps you understand a lot about what it is you are bringing in and where it is going. Also what you might need to change to benefit your lifestyle or the lifestyle you are aiming for in the future.